The Canadian dollar has been under pressure against the U.S. dollar on growing concerns about the impact low oil prices and an oil glut will have on the broader economy. There are also mounting concerns about the broader Canadian economy stalling while the U.S. economy continues to show signs of sustainable growth.

Loonie Feels Pressure as Canadian Economy Stumbles

From May 2015 to January 2016, the Canadian dollar fell 18% versus the U.S. dollar, from around $0.83 to $0.68—the lowest level since 2003. The loonie tumbled on growing concerns about the broader economy and lower oil and gas prices.

That said, the Canadian dollar rallied over recent months as fears about a global recession eased and oil prices climbed. From the middle of January to early May, the Canadian dollar climbed 18%, hitting a high of around $0.80, with some analysts calling for the Canadian dollar to top $0.85 versus the U.S. dollar.

But that didn’t happen. While stable, the loonie has stalled at around $0.77 versus the greenback. Solid economic data out of the U.S. and less than encouraging data out of Canada has been putting pressure on the loonie.

Canadian wholesale trade rose just 0.1% in April, far less than the expected 0.5% increase.1 This was just the latest sign that the Canadian economy remains weak. And it isn’t expected to rebound until at least the third quarter.

In the first quarter, the Canadian economy advanced 2.5%, which on the surface sounds great. But the economy contracted by 0.2% in March and 0.1% in February. The weak end to the first quarter is mostly attributed to the resource sector.2

This also raises concerns about the second quarter. For the Canadian dollar to rebound against the U.S dollar, there needs to be growth. But where is that growth going to come from? Oil prices are hovering around $50 per barrel, but will that be enough?

By comparison, the U.S. economy is making one of the strongest comebacks in the developed world. The country’s economic output is 10% above the pre-financial crisis peak, U.S. hiring remains solid, wages are inching higher, and inflation is down.3

CAD to USD Exchange Rate to Fall

Keep in mind, a rising CAD to USD exchange rate is not good for the Canadian economy. If the loonie rises against the U.S. dollar, Canadian exports to the U.S. become more expensive. And the U.S. is Canada’s biggest trading partner.

As the Canadian economy continues to follow in the shadows of the U.S. economy, the Bank of Canada may continue to keep interest rates near record-low levels, or even lower them further. This will lower the value of the Canadian dollar even further.

At the same time, the U.S. Federal Reserve has made it clear that a hike in interest rates is coming. This raises the value of the U.S. dollar. A weak Canadian economy, strengthening U.S. economy, and falling commodity prices will drive the Canadian-to-U.S.-dollar exchange rate lower.

Learn-To-Trade.com, Toronto’s Leader in Forex Trading Courses

Trading currencies makes up the largest financial market in the world. Where the New York Stock Exchange trades daily volume of around $51.6 billion, the global foreign exchange market trades more than $5 trillion.

Trading currencies is a lot like trading stocks: the more you understand, the better your chances will be of developing a profitable trading strategy. As the leading (and oldest) provider of stock market trading courses in Canada, Learn-To-Trade.com will teach you currency-trading strategies and how to profit from the volatility of the global markets.

To learn more about Learn-To-Trade.com’s forex trading course, call us at 416-510-5560 or e-mail us at info@learn-to-trade.com.

George Karpouzis is the co-founder of Learn-to-Trade and has been personally providing education and mentoring to over 3000 members since 1999. George has been trading in the stocks, options, futures and forex markets using technical analysis since 1986. With the help of advancements in trading technology the Learn To Trade program is now accessible worldwide. His background and passion for teaching brings an invaluable asset to our members. George is constantly striving to improve the program content and develop new strategic relationships for the benefit of the members. Add me to your G+

Testimonial 3

I wanted to let you know that I had taken your course in the fall of 2013. I took your advice and used demo accounts for the last quarter of 2013. I switched to real money trading account in the Near Year, when I finally felt comfortable. Following the lessons taught to me by you (don’t jump on a moving train, peaks and valleys, EMA..etc), I wanted to let you know that I have been successful beyond my own expectations. Thank you very much – taking the Learn-to-Trade course was, by far, the best decision I made in my business career.

Steven R

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4.0

2014-08-20T02:56:18-04:00

Steven R

I wanted to let you know that I had taken your course in the fall of 2013. I took your advice and used demo accounts for the last quarter of 2013. I switched to real money trading account in the Near Year, when I finally felt comfortable. Following the lessons taught to me by you (don’t jump on a moving train, peaks and valleys, EMA..etc), I wanted to let you know that I have been successful beyond my own expectations. Thank you very much – taking the Learn-to-Trade course was, by far, the best decision I made in my business career.

https://www.learn-to-trade.com/testimonials/testimonial-3/

Joseph L

The past options and forex tutorials taught by George were very helpful. I find these tutorials invaluable for a busy person like myself. I was able to keep myself up to date and on track ready to continue the learning process. Thanks for all the help and keep up the great work.

Joseph L

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2014-08-20T10:36:37-04:00

Joseph L

The past options and forex tutorials taught by George were very helpful. I find these tutorials invaluable for a busy person like myself. I was able to keep myself up to date and on track ready to continue the learning process. Thanks for all the help and keep up the great work.

https://www.learn-to-trade.com/testimonials/joseph-l/

Harley S

The course is amazing. Where were you 30 years ago?

Harley S

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2014-08-20T10:37:39-04:00

Harley S

The course is amazing. Where were you 30 years ago?

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Partick M

I learned the basics I needed to trade successfully.

Partick M

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2014-08-20T10:38:34-04:00

Partick M

I learned the basics I needed to trade successfully.

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I like making money. I’m very happy, so far so good

Iouri G

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2014-08-20T10:39:27-04:00

Iouri G

I like making money. I’m very happy, so far so good

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I learned things it would have taken me years to figure out

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I learned things it would have taken me years to figure out

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Robert B

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2014-08-20T10:40:59-04:00

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Uldus V

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2014-08-20T10:41:40-04:00

Uldus V

I was impressed with the course’s professionalism and enthusiasm.

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Dean K

I wish I knew about trading as a business years ago!

Dean K

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2014-08-20T10:42:24-04:00

Dean K

I wish I knew about trading as a business years ago!

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Peter P

Learn to Trade provided me with strategy, self-confidence and discipline

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2014-08-20T10:42:57-04:00

Peter P

Learn to Trade provided me with strategy, self-confidence and discipline

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Shelley P

I took your course in 2008 and loved it. Since then I have been using what I learned at Learn-to-Trade to nicely supplement my pension income. Wanting a carefree type of trading, I have for the most part just sold options and made a monthly income which is a nice addition to my pension. I know I never would have made this kind of trading income without Learn-to-Trade. Thank you!

Shelley P

Learn To Trade

5.0

2014-08-20T10:34:39-04:00

Shelley P

I took your course in 2008 and loved it. Since then I have been using what I learned at Learn-to-Trade to nicely supplement my pension income. Wanting a carefree type of trading, I have for the most part just sold options and made a monthly income which is a nice addition to my pension. I know I never would have made this kind of trading income without Learn-to-Trade. Thank you!

https://www.learn-to-trade.com/testimonials/shelley-p/

Amir

Hi George,

I just wanted to thank you again for the amazing work on the tutorials especially Options trading. Prior to joining, I had underestimated the quality of the trainings but they certainly far exceeded my expectations. Only I wish I’d found you 5-10 years ago!

Learn To Trade

5.0

2016-10-07T08:56:52-04:00

Hi George, I just wanted to thank you again for the amazing work on the tutorials especially Options trading. Prior to joining, I had underestimated the quality of the trainings but they certainly far exceeded my expectations. Only I wish I’d found you 5-10 years ago!

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